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House approves PBM transparency bill after sponsor says it will lift 'gag' clauses and clarify DIR fees
Summary
The House adopted Fourth Substitute SB 208 to prohibit PBM contract "gag" provisions that prevent pharmacists from telling customers about cheaper options and to require reporting of DIR fees; sponsor said the substitute removes much opposition and the House passed it 71–0.
The Utah House adopted the fourth substitute of Senate Bill 208 on March 7, a measure the sponsor described as aimed at increasing transparency in pharmacy benefit manager (PBM) contracts and giving pharmacists more ability to help consumers.
Representative Ray, sponsor of the substituted bill, told colleagues the measure targets contractual provisions that prevent pharmacists from disclosing cheaper ways to buy a drug. "They can't contract and tell the pharmacist that they can't tell you that instead of paying your $25 co-pay, that you might be able to just buy this for $5 if you paid directly for this," Ray said on the House floor, calling such provisions a "gag order." He added the bill requires PBM reporting of direct and indirect remuneration (DIR) fees, which sponsors said can later show up as bills to pharmacies ranging from about $1,500 to $70,000.
Ray described the substitute as a compromise reached with PBM entities that should remove much of the opposition and make pricing more transparent to pharmacies and consumers. Representative Owens rose in support, saying the proposal reflected principles he associated with President Ronald Reagan. Representative Christiansen echoed backing and urged colleagues to support the bill.
The House adopted the substitute and recorded final passage as substituted: Senate Bill 208 received 71 yes votes and 0 no votes and will be returned to the Senate for further consideration.
Why it matters
Sponsors and backers said the bill removes contractual limits that could prevent pharmacists from telling patients about lower-cost alternatives and requires more disclosure about fees that can materially affect a pharmacy's bottom line. That combination, they argued, could reduce out-of-pocket prescription costs for consumers and give pharmacies clearer information about PBM fee assessments.
What the bill does (as explained on the floor)
- Prohibits PBMs from including "gag" contract terms that bar pharmacists from informing patients about cheaper purchasing options. - Requires reporting by PBM-contracting entities about direct and indirect remuneration (DIR) fees so pharmacies understand why and how large post-sale charges are assessed.
Next steps
Senate Bill 208, as substituted, will be returned to the Senate for further consideration and any required signatures.
Representative Ray's floor presentation and direct quotes were used from the House record; all attributions in this article are drawn from the transcript.
